Too many accelerators: Are corporate startup programmes doing more harm than good?

Here at VentureVillage it feels like we get notified about a new accelerator/incubator/company builder that’s popped up in Berlin every week. There’s no doubt about it: getting a foot in the startup door has become the biggest trend for German corporates the past year. But when it comes to figuring out which (if any) of the programmes is the right choice a lot of entrepreneurs are left non-plussed.

To help make the decision easier, Berlin Startup Academy founder and enthusiastic event-goer Christoph Raethke runs through the pros and cons of getting involved in a corporate startup programme…

Last week, the second Berlin Startup Academy semester started. That’s probably not a very interesting piece of information for a tech audience that reads similar announcements every other day. Or so, at least, it seems. Accordingly, when Microsoft recently announced that they, too, would start an accelerator programme in Berlin, there was a perceptible moan among the usual suspects: “Oh wow, finally – an accelerator program!”

It’s understandable. From Bayer pharmaceuticals to Rewe supermarkets, from O2 telecoms to Pro7 television, from Fielmann opticians to Axel Springer publishers, everybody and their neighbour seems to be at it these days.

And it doesn’t help that the media sometimes mixes up the roles and benefits of these programmes with those of other market players. Last week, an article on ZDnet, threw early-stage investors such as MakeAStartup, Telekom Hubraum, and Berlin’s company-builders in with the accelerator lot. So yes – if you don’t look closely enough, it can look bewildering.

The problem with corporate accelerators

This has many people asking me in what ways the options differ. Often with an added question of how BSA, which is not funded by or affiliated with a fund or corporation, can be as good as players with dramatically more resources.

What I tell people is that accelerators created by corporations or funds have a tendency to create “silos”. They often have one location where participants move into on day one of a program, work for months, and finally emerge on Demo Day with brilliant presentations. They normally bring in a group of professionals as mentors, with a tendency to create “our” group of mentors as opposed to “your” group of mentors. Through their affiliation with, say, a big media company, they claim to bring in exclusive benefits from their respective backer – with the keyword here being “exclusive”.

Here’s the advice that I have when asked how to tell the good from the bad in the accelerator field. Number one, look at the team behind the program and ask how many of these guys have credible entrepreneurial experience. I haven’t scrutinised the CVs of all accelerator teams on the market. But when I looked at the team of a certain Munich-based outfit, I was surprised to see how firmly they seem to be convinced that careers fluctuating between McKinsey/BCG on the one hand, and corporate strategy positions on the other hand, would make credible start-up advisors.

Entrepreneurs > Consultants (when it comes to mentoring)

Number two: look at the mentoring concept and people. Here too, the essential metrics is how many mentors actually are – or at least were – entrepreneurs. Yes, it is useful to have consultants, service providers, or expert employees to help with specific questions, particularly technical ones.

But for two reasons, I’ve found that actual entrepreneurs are who count most in a mentoring body. For one, they know the limitations and fears that come with having no money and lots of responsibility. In contrast, for some years I was a freelance business consultant myself, and at first sight, the difference to having your own company doesn’t seem so big. After all, you’re self-employed too.

But these are really different worlds. In a good month, I would write invoices of €14,000 and more for my services – with nothing to spend the money on but myself (I didn’t even have an office then). And most importantly: a network of consulting companies (“body leasers”) behind me that took care of me getting jobs practically eliminated serious risk.

And secondly: only entrepreneurs can really open doors for you – because they are masters of their own and their companies’ time and resources. They can make calls, get personally involved, communicate your cause, give you access to events, invest money without having to ask their line manager first – and that’s what you need when trying to turn your idea into something tangible.

For that reason, it also helps to check how many mentors are beyond their first attempt at launching a company. Common sense dictates that as more and more accelerators join the fray, the quality of mentorship is bound to be reduced – down to a point where the mentors involved are either service providers using mentoring for business development or second-tier guys for whom being a mentor at XY Accelerator is the highlight of their CV.

Avoiding the “silo” effect

At BSA we’re trying to avoid the silo syndrome at all cost. Of the 16+ mentoring sessions that we’re doing with participants, up to 50 per cent will be open for guests – and we’ll host them at public places. On the one hand, this gives participants what they need – exposure to find cofounders, get feedback, get known for what they do, spread their ideas.

And they’ll also get to know the places of the Berlin ecosystem. For example, having our session on Public Subsidies at a place where these subsidies are actually decided upon (at the Technologiestiftung Berlin premises) gives you a much clearer idea of who you’re talking to when applying for public cash.

In short, we’re trying to turn the cityscape of Berlin and its people and organisations into BSA’s operating system. We’re calling it “BerlinOS”, and we believe that it should be as Open Source as possible.